How Filing for Bankruptcy Can Help Michigan Small Business Owners

Finding success as a small business owner in today’s big-box store and corporate climate is more difficult than ever.

Many small business owners are facing the potential of crushing loan debt and credit card debt, attempting to survive the current volatile market conditions, supply chains, and other challenges.

If this seems achingly familiar to you, then you should know that filing for bankruptcy can help small business owners find relief.

5 Reasons for Small Business Bankruptcy in Michigan

Even in the most ideal economic conditions, running a small business is risky. So, if you’re facing a significant struggle as a small business owner, you’re far from alone. Many circumstances can lead to bankruptcy. The top five are as follows:

1. Poor State of the Economy

While you may be inclined to carry the burden of your struggling company, keep in mind that external factors, such as how the economy is performing, can have a huge impact on your business.

If there’s an economic downturn, consumer spending decreases which will directly affect your revenue stream(s). Meanwhile, when there are changes in interest rates, this can increase the cost of borrowing, which can be tough if you have high debt levels. In addition, if your business relies on international relations, any fluctuations in currency exchange rates can cause your profitability to take a hit.

2. Difficulties with Leadership and Management

While strong leadership is essential for any small business, it’s not always easy to find or hold onto talented leaders and managers. And an underqualified manager can easily lead to poor decisions that will negatively impact the company. They are also unlikely to possess the skills for the strategic planning that’s crucial for long-term success. In addition, the lack of strong leadership in a small business equates to low employee morale, decreased productivity, and a negative company culture that can affect your bottom line.

3. Struggles with Managing Company Finances

Similar to finding the best candidates for leadership positions, it’s crucial to find the right people with the skills and know-how to manage finances. This can be a challenge.

Experienced financial managers should have a history of successfully managing cash flow and excessive debt. They must be able to excel in financial planning and provide a comprehensive plan that responds to market changes, invests in growth opportunities, and ensures that resources are properly allocated

4. Changes in the Market and Competition

As mentioned above, the financial management sector of a small business must be able to respond to market changes. This is true of the entire company culture though.

A keen awareness of and ability to pivot with market dynamics is essential. Successful small businesses are those that can differentiate themselves from the competition while adapting to changing consumer preferences and keeping up with changing technologies.

5. Business Regulatory Compliance and Other Legal Issues

Into every life, a little rain must fall. Small businesses are no exception. Costly litigation over labor disputes and contract issues, for example, can put a stranglehold on a small business. Or if your small business is in the position of having to adhere to industry standards or comply with regulatory requirements, then you must abide by them. Otherwise, you may end up with costly fines and legal repercussions, as well as operational disruptions, and a hit to your reputation.

Filing for Bankruptcy Can Help Small Business Owners in Michigan

Whatever the reason for your struggles, filing for bankruptcy can help you by offering debt relief while providing protection from creditors. And depending on the type of bankruptcy you file for, you may be able to do a business reorganization or, as the case may be, a liquidation.

Hiring a skilled business bankruptcy attorney is your best line of defense to determine which is right for you.

For example, if you’ve decided it’s time to shutter your business, an attorney may have you choose a Chapter 7 bankruptcy to discharge both business and personal debts. If you’re the sole proprietor attempting to keep your business while catching up on past-due payments, you may be advised to do a Chapter 13 bankruptcy. Finally, if you’re in a partnership or LLC, and you’re open to financial restructuring while continuing to operate under court supervision, Chapter 11 bankruptcy may be encouraged as the best route.

Whatever the case, as a small business owner, you don’t want to file for bankruptcy on your own.

Consult With Experienced Southfield, MI Business Bankruptcy Attorneys

With over 100 years of combined experience, our team of bankruptcy attorneys will show you how filing for bankruptcy can help small business owners like you.

We will help determine the best chapter for your situation and maximize allowed deductions. So let us show you what we can do.

Don’t hesitate to contact us at 248-462-7698 to schedule a free initial consultation. You can also connect using our email form. We’re here to help.